I am a CPA in Texas with an MBA from the University of Chicago. I have seen a lot and made many mistakes. Hopefully by now I will have learned something from them. Just as importantly, you may learn something from my mistakes. You can e-mail me by clicking on my "View my complete profile".

Tuesday, July 21, 2009

China Sells Dollars-3

"China again sought to satisfy its hunger for natural resources, as state-owned Sinopec Group, agreed to acquire oil-exploration company Addax Petroleum Corp. for 8.27 billion Canadian dollars (US$7.19 billion), in what would mark the largest oveseas takeover by a Chinese company. ... The transaction also underscores the growing appetite for risk among Chinese resource companies. ... But in the past year, Chinese state-owned companies have been encouraged to make acquisitions by a central government convinced that the global financial crisis has created an unmatched buying opportunity", my emphasis, Guy Chazan and Shai Oster at the WSJ, 25 June 2009, link: http://online.wsj.com/article/SB124584068908746803.html.

China's dollar-selling spree continues. I disagree that the "transaction also underscores the growing appetite for risk among Chinese resource companies". It's the opposite. These companies see resources in the ground as less risky over the long-run than holding US dollars. So do I.

1 comment:

China plans for the future and buys raw materials and the US government spends the peoples resources shoring up TBTF banks. Which are so insolvent that they can't relend in these uncertain conditions.

China has done the same in the past with their banks... but those banks were lenders of the state...mere disbursing windows for state resources... here, in contrast, our banks are just pyramid schemes to enrich those who sit at the top...